While studying all of the legal perspectives of business and looking at exactly how most business are organized, the study included Sole Proprietorship, Partnership and lastly Corporation. The Partnership legal perspective when including all of the advantages and disadvantages seem be the perfect fit into the business venture. But being aware of all the disadvantages can save the business as well. For example, be careful when going into business with family or friends. When going into a partnership, a balance must remain somewhere.
WHAT’S TO BE CONSIDERED WHEN STARTING YOUR BUSINESS 3 What’s to be considered when starting your business? Initially after reading the scenario, I began to believe that the most economical and positive area of business to go into would be the sole proprietorship. However after reading over the scenario several times afterwards, it seems as though the best all-around form of business would be a partnership. When looking to start a small business that also will have low turnover, the best choice when looking at starting a new business would be a partnership.
What made me choose that one based on the scenario was due to the initial startup cost. This way the entire amount will not fall on her lap and the time would be split between her and her partner (recalling the mention from her husband regarding the time that she would be spending away from the family). However, in this case long term the possible turnover and any additional debt would need to be considered as well. A Sole proprietorship is known as one of the most common forms of business, which is also one that within the small business environment is widely known and operated.
As a individual proprietor, one has the responsibility for every business transactions including any and all debts that the business may incur. The advantage would be the control that the sole proprietor has regarding any and all business decisions that need to be made. The disadvantage would be that since the sole proprietor has complete control over the business, which in turn would also be make him personally liable for any and all debts that the business should incur. (Jean Murray, About. com US Business Law) WHAT’S TO BE CONSIDERED WHEN STARTING YOUR BUSINESS 4 When forming a partnership, it is actually very easy.
It is basically a verbal or written contract, which can in the end carry less of all the legal formalities. When entering into a partnership with someone or more than one party, you must make sure that all ideas are eventually going to end up inthe same spot. Meaning that all partners are on the same page. The advantage to a partnership would be the initial start-up costs are actually lower due to them being divided up between more than one people. Also when coming up with new ideas, using more than one brain is always a good thing. But when looking at disadvantages, there is always the chance of having a disagreement.
Who would be right? Who would be wrong? Who idea is the best? When everything is equal its not as easy just to give your opinion and move forward with it. Because it is a partnership, you now must take into consideration the other party. (Accounting Explained 2011-2013) A corporation is an independent legal entity, which is totally separate from the people who control, own and actually manage it. An advantage to having a corporation is that the shareholders have very limited responsibility regarding any debts that would be acquired against the corporation.
They (the shareholders) are only held liable for what they invest in the company. However, one of the major disadvantages there is more startup money needed as well as more time needs to be invested to get the corporation up and off of the ground WHAT’S TO BE CONSIDERED WHEN STARTING YOUR BUSINESS 5 In conclusion, the final decision when starting a business will need to have many areas looked at in the very begin. The most important being the funding. The decision will be if there will be any additional investors to assist with the startup.
But before any great business is up and rolling, one must always look at the market, the investments needed as well as the possible loss of money. References: What is a corporation? http://www. nolo. com/legal-encyclopedia/corporations-faq-29122. html http://www. ebusinesstrainingmanitoba. com/advantages-and-disadvantages-of-corporation-company/index. html http://www. business. tas. gov. au/starting-a-business/starting-a-business-from-scratch/choosing-a-business-structure-intro/partnership-advantages-and-disadvantages http://www. nytimes. com/allbusiness/AB4113314_primary. html.